Failure isn't just an option. In Airlineland, it's become a business plan.

AMR, the parent company of American Airlines, filed for Chapter 11 Tuesday, becoming the last of the "legacy" U.S. carriers to succumb to court protection. Every other major carrier except Southwest has filed bankruptcy at least once.

AMR itself was less than an hour from the courthouse steps in 2003, before its unions agreed to about $1.6 billion in concessions. Their reward: an eight-year delay of the inevitable.

While American kept itself out of court, four of its rivals failed: United, Delta, Northwest and US Airways. All have since merged with others, pushing AMR from the biggest carrier to No. 3 and leaving it with a smaller share of lucrative international markets that offer the best hope for revenue growth.

Bankruptcy in the airline industry is now an accepted part of the business cycle. It enabled American's competitors to cut costs in a way they never could outside of court, and AMR will do the same.

The first target is likely to be pensions. AMR has said it operates at an $800 million cost disadvantage to competitors that have been through bankruptcy. In a regulatory filing in September, it said it expected to contribute $560 million in cash to pensions next year.

In other words, just by whacking the pensions, the carrier goes a long way toward closing the cost gap with the post-bankruptcy pack.

The government's Pension Benefit Guaranty Corp. estimates that AMR workers may lose $1 billion in benefits if the carrier dumps its pensions on the government.

Meanwhile, American's unions, having given up that $1.6 billion eight years ago, will now be forced to give up more. They had hoped for a reward for their earlier sacrifice, but the prospect of higher labor costs undoubtedly figured into the bankruptcy decision. With most of its aircraft already leveraged to the hilt, the airline had little hope for raising additional cash.

So did rising fuel prices, which created a double whammy from its two biggest expenses. Jet fuel prices this year have averaged a record $3 a gallon, and they've risen more than 50 percent in the past five years. That's especially damaging for American, whose clunky fleet dominated by aging MD-80s uses more fuel than many of its rivals.

In filing for Chapter 11, AMR is playing catchup to rivals that failed faster, ending the latest airline bankruptcy binge. The industry went through a similar failure cycle in the early 1990s and another one in the 1980s.

The question, of course, is what happens next. New CEO Tom Horton told employees that job cuts and flight reductions are likely. That may offer some short-term benefits to rivals like United, which acquired Continental last year. Fewer planes flying mean others may pick up market share.

Consumers may benefit because in bankruptcy, American will probably slash fares, forcing other airlines to match on routes where they compete.

But those are short-term issues. Over the longer term, bankruptcies only further undermine the industry's already poor customer service, because like pensions and labor contracts, amenities are a favorite target of reorganizations.

And what happens when AMR emerges from Chapter 11 and all the airlines are once again on similar cost footing? They have squeezed labor for every possible concession, squeezed passengers with a litany of new fees and squeezed their own cost structure by cutting flights and filling almost every remaining airplane seat.

For now, most carriers are again making money, at least until fuel prices jump again. But, as former AMR Chairman Bob Crandall noted on CNBC Tuesday, the industry is a long way from earning back its cost of capital, and that isn't likely to change.

The solution to airlines' financial woes are things customers hate: fewer planes, fewer flights, higher fares and, indeed, fewer airlines. That, however, won't happen because unlike many other industries, Chapter 11 for airlines offers more benefits than drawbacks. Airlines may fail, but they don't go away, and so the process repeats.

AMR's bankruptcy, like those that came before it, isn't a solution to the industry's pervasive profitability problem, merely a symptom of it. Even in Airlineland, perennial failure can't breed long-term success.